Erlanger Medical Center

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The Federal Trade Commission staff has advised Erlanger Medical Center, Memorial Hospital Division of the Sisters of Charity of Nazareth Health System, Inc., and Women's East, Inc., that the operation by Erlanger and Memorial of a new hospital in a Chattanooga suburb specializing in obstetrical hospital ser- vices would not appear to violate the antitrust laws.

Erlanger and Memorial propose to operate jointly, through Women's East, Inc., a new 28-bed hospital in Chattanooga's eastern suburbs that would specialize in the provision of obstetrical hospital services associated with routine, low-risk childbirth, along with related gynecological services. Erlanger and Memorial share ownership of the joint venture, with each hospital naming half of the venture's governing board members. Erlanger, with 811 licensed beds, is the largest general acute care hospital, as well as the leading provider of obstetrical hospital care, in Chattanooga and the surrounding region. Memorial, with 350 licensed beds, is one of Erlanger's major general hospital competitors in the Chattanooga region. However, Memorial does not offer obstetrics.

In a letter signed by Mark J. Horoschak, Assistant Director for Health Care of the FTC's Bureau of Competition, the Commis- sion staff states that "...on balance,...the Women's East venture is not likely to substantially threaten competition for obstet- rical hospital services," adding that, "with appropriate pre- cautions, the operation of the Women's East joint venture will not significantly threaten competition in the Chattanooga metropolitan area for non-obstetrical hospital services."

The antitrust issues examined by the FTC staff were the effect of the venture on possible entry by Memorial on its own into obstetrics, the possibility that the cooperation between Erlanger and Memorial that would result from the Women's East venture would "spill over" into other aspects of Erlanger's and Memorial's operations, and the potential of the joint venture to create procompetitive efficiencies.

NOTE: This letter sets out the views of the staff of the FTC's Bureau of Competition, as authorized by the Commission's Rules of Practice. It has not been reviewed or approved by the Commis- sion. As the Commission's rules explain, the staff's advice is rendered "without prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding." Staff advice concerning issues covered by the FTC/DOJ Health Care Policy Statements will be given within 90 to 120 days (depending on the topic) after all necessary information is provided.

Copies of the staff letter and the original inquiry, as well as the DOJ/FTC Statements of Antitrust Enforcement Policy in the Health Care Area, are available from the FTC's Public Reference Branch, Room 130, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

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